Another Blow to Barclays' Image
The latest incident raises concerns regarding the overall ethics and culture of the bank, and we see this as a blow to management's credibility.
Barclays (BCS) has announced that CEO Jes Staley is being investigated by the U.K. Financial Conduct Authority, or FCA, and the Prudential Regulation Authority, or PRA, after his attempt to identify a bank whistleblower. While we believe Barclays' board has taken the right steps, this does raise concerns regarding the overall ethics and culture of the bank, and we see this as a blow to management's credibility. At this point, we plan to maintain our no-moat rating for Barclays, along with our fair value estimate. We also retain our Standard stewardship rating for the bank, as our stewardship ratings reflect capital-allocation practices, and we believe our rating fairly reflects frequent upper-management changes, as well as the high-profile misconduct and litigation charges that the bank has experienced since the crisis.
In its press release, Barclays highlights that the CEO's actions came to the attention of its board of directors in early 2017; following this, the bank hired an external law firm for further investigation and notified the FCA, PRA, and other relevant regulatory bodies. The board also further concluded that, as the nature of this breach was very serious, the CEO's awarded compensation will see a significant adjustment.
In 2013, the Barclays board commissioned Anthony Salz to carry out an “independent external review” of its business practices systems, controls, and culture. Barclays undertook the recommendations of the Salz review, which it completed in 2015. This newly surfaced investigation now raises questions regarding whether these cultural changes have truly been adopted and are beneficial, and whether we will see further conduct- and litigation-related issues.
Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.
Derya Guzel does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.